Observations on economics, the academy, the wider world, and things that run on rails.

12.5.16

EVIDENCE OF EVOLUTIONARY STABILITY.

In Reason, Deirdre McCloskey's Bourgeois Equality (by all means read and understand it in full) explains the dynamic, without resort to Nash equilibrium.

An institution works, if it does, mainly because of the good ethics of its participants, intrinsic motivations powerfully reinforced by the ethical opinion people have of each other. A society can craft an official rule against cheating in business, a good institution. Yet if the rule is enforced with a nudge and a wink among people who ignore simple honesty or who sneer at the very language of ethics, and who are not effectively condemned by the rest of society for doing so—as in a corrupt Chicago during the 1890s or in a corrupt Shanghai during the 1990s—the economy won't work as well as it could.

The crux is not black-letter constitutions but how the constitutions came about ethically and how they are sustained in social ethics, the continually renegotiated dance located out in the language games that people play as much as in their "utility functions." When a society or its elite earnestly wants the rules of the game to work, and talks about them a lot, and scolds violators from an early age, the constitutions work, pretty much regardless of imperfections in the written-down rules and incentives. The political scientists Elinor and Vincent Ostrom at Indiana University showed repeatedly that a situation that would in the usual economics always be a hopeless case of "free riding" and "the tragedy of the commons," such as the overexploitation of the Los Angeles aquifer, can often be solved by talk among serious-minded, ethically disciplined people.

"Ignore simple honesty or ... sneer." Thus comes the rent-seeking.

In the 18th century, certain members of the clerisy, such as Voltaire and Tom Paine, had courageously advocated for liberty in trade. But by 1848 a much enlarged clerisy, mostly the sons of bourgeois fathers, had commenced sneering at the economic liberties their fathers exercised so vigorously. They advocated instead the vigorous use of the state's monopoly of violence to achieve utopia, now.

On the political right the clerisy, influenced by the Romantic movement, looked back with nostalgia to an imagined Middle Ages free from the vulgarity of trade, a non-market golden age in which rents and hierarchy ruled. Such a Romantic vision of olden times fits well with the right's perch in the ruling class, governing the mere in-dwellers. Later, under the influence of a version of science, the right seized upon social Darwinism and eugenics to devalue the liberty and dignity of ordinary people, and to elevate the nation's mission above the mere individual person, recommending colonialism and compulsory sterilization and the cleansing power of war.

On the left, meanwhile, the cadres of another version of the clerisy—also influenced by Romance and then by a scientistic enthusiasm, in their case for historical materialism—developed the illiberal idea that ideas do not matter. What matters to progress, the left declared, is the unstoppable tide of history, aided (it declared further, contradicting the unstoppability) by protest or strike or revolution directed at the thieving bourgeoisie. Such thrilling actions would be led, of course, by the clerisy. Later, in European socialism and American progressivism, the left proposed to defeat bourgeois monopolies in meat and sugar and steel by gathering them all into one supreme monopoly called the state.

While all this deep thinking was roiling the clerisy of Europe, the commercial bourgeoisie created merely the Great Enrichment and the modern world. The Enrichment gigantically improved our lives. In doing so, it proved that both social Darwinism and economic Marxism were mistaken.

And yet, the Fatal Conceit lives on, whether in the form of Jesus Teaches This Is For Your Own Good, or in the form of Four Of Five Experts Agree This Is For Your Own Good.

Let’s be clear about supposed conservatives like George W. Bush, Mitt Romney, Paul Ryan, Mitch McConnell, & company: they're all progressives. Sheldon Adelson, Rupert Murdoch and Fox News are progressive. They all want government to do something rather than refrain from doing something. Their party label is irrelevant, as is their positioning of themselves slightly to the right of Obama regarding the rate at which the state grows in size and scope.

The Trumpening is a hostile takeover of the Jesus Teaches wing of the governing class, but what comes next?